Looking for a Sector – Health fund? You may want to consider Schwab Health Care Fund (SWHFX) as a possible option. SWHFX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes SWHFX as Sector – Health, a segment packed with options. Sector – Health mutual funds offer investors a focus on the healthcare industry, one of the largest sectors in the American economy. These funds can include everything from pharmaceutical companies to medical device manufacturers and for-profit hospitals.
History of Fund/Manager
SWHFX is a part of the Schwab Funds family of funds, a company based out of San Francisco, CA. Schwab Health Care Fund debuted in June of 2000. Since then, SWHFX has accumulated assets of about $654.18 million, according to the most recently available information. The fund’s current manager, Wei Li, has been in charge of the fund since June of 2013.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 4.22%, and is in the middle third among its category peers. If you’re interested in shorter time frames, do not dismiss looking at the fund’s 3-year annualized total return of 8.53%, which places it in the bottom third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Over the past three years, SWHFX’s standard deviation comes in at 14%, compared to the category average of 16.34%. Looking at the past 5 years, the fund’s standard deviation is 14.95% compared to the category average of 16.8%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. SWHFX has a 5-year beta of 0.57, which means it is likely to be less volatile than the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. Over the past 5 years, the fund has a negative alpha of -4.15. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, SWHFX is a no load fund. It has an expense ratio of 0.80% compared to the category average of 1.08%. So, SWHFX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Schwab Health Care Fund ( SWHFX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Schwab Health Care Fund ( SWHFX ) looks like a somewhat average choice for investors right now.
For additional information on the Sector – Health area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into SWHFX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Get Your Free (SWHFX): Fund Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
